‘Rural Myths’ – don’t worry, be happy (updated 2mar12)

George Rebane

There is no question that governments at all levels have become less efficient from the taxpayers’ viewpoint.  This inefficiency is felt from many quarters and with respect to applied metrics, ranging from ‘bang per buck’, through layers of onerous regulations and mandates, to the ongoing removal of freedoms often through gratuitous criminalizations.

We live in a county that, on the whole, is fiscally well managed.  However, in recent years many of us have started to notice some pretty significant lapses in how our elected officials do business.   As examples, we may consider the string of bad decisions made during the recent AtPac lawsuit (q.v.), the demonstrated and endured lack of competency in the county counsel’s office, and our county’s official discounting/denial of its unfunded pension obligations.  On all of these, the inquiring citizen faces a phalanx of tightly circled wagons, and is ridiculed for bringing up individual issues.

The portent of the county’s unfunded liabilities are undoubtedly the biggest sword hanging over our taxable heads.  The amount that the county will have to pay out in the future (the out-years) is actually a complex calculation, and depends on not only the legal obligation to the public service retireds, but also on how much CalPERS will have in our account.  We have to remember that PERS is just an investment manager for the retirement funds the county remits to it.  PERS has no obligation to do anything except disperse what is in the Nevada County’s account.  (And then we are in a risk pool with a couple of hundred other jurisdictions like the profligate City of Bell, which is a whole other dimension of risk.)

This account may go up or down, depending on the vagaries of the securities markets and how astute the PERS portfolio managers are.  Their obligation as a fiduciary is only to do their best, come what may, and also to tell us their best estimate of what our unfunded part is when payments come due.  And that is where the problems start.  Local jurisdictions all over the country are basically in arrears, and many cities and counties are on the brink of Chapter 9 bankruptcy.

In California, Stockton is our next city that is prepared to file.  The San Francisco Chronicle has a more complete report on the entire situation in the state, and it isn’t pretty.

Added to the above calculations we have at least one “side fund” and yet to be explained amounts of monies due that are not shown on the county’s financial statements.  The situation is murky indeed, and our electeds are not exactly leaning forward to clear up the obligations that are facing us.  What I would like to see is a chart like the one below that shows by year Nevada County’s total known and anticipated obligations with error brackets showing the high-to-low range.

For more a higher level perspective, we recall the 2009 quote by Mr Ron Seeling, Chief Actuary of CalPERS –

"I don't want to sugarcoat anything. We are facing decades without significant turnarounds in assets, decades of …unsustainable pension costs of between 25 percent of pay for a miscellaneous plan and 40 to 50 percent of pay for a safety plan …unsustainable pension costs. We've got to find some other solutions.”

And things have gotten worse since then.

Finally, to put a finer point on it, I am copying an article in yesterday’s 25feb12 Union by Mr Mike McDaniel who was lead author of the 2007 SESF unfunded liabilities report (download) that was given to our Board of Supervisors, and followed up by a 2009 presentation to the BoS.  The reception of these by our county government was, let’s just say, less than enthusiastic.  And since then the wagons at the Rood Center have circled a bit tighter.  Here’s Mike's article with its included graphic -

Unsustainable public employee pension plan costs will continue to decrease the value provided by government to taxpayers. In 2007, I co-authored a prophetic report titled “Unfunded Liabilities — Our Community's Fiscal Time Bombs.” The 2007 report highlighted the crisis brewing in relation to public employee pension funds. Less than a year after the report was published, the crisis was exacerbated as the economy and stock market (critical to pension plan health) crashed.

I am of the opinion that decades of failed leadership, overwhelming public employee union power and mismanagement by CalPERS have created a crisis that is too big to solve.

Leadership (on federal, state and local levels) continues to ignore the crisis, public employee unions continue to grow stronger and CalPERS shows no intentions of shifting to a sustainable program.

I don't expect our politicians (on all levels) to reform public employee pension plans. Instead, I expect the value provided to taxpayers to continue to drop. Accepting that each public employee adds value to taxpayers, we must also accept that paying more for fewer public employees significantly decreases the value to taxpayers.

Though this crisis exists across the United States (and around the globe — see Greece) I will use Nevada County (in my opinion a very well-run county) to support my point:

In 2001 “salaries and benefits” were 39 percent of the annual budget. Today “salaries and benefits” equal 47 percent of the annual budget. This increase in cost coincided with a substantial decrease in the number of employees (from 1,055 employees in 2001 to 777 employees today — a drop of 26 percent).

In other words, “salaries and benefits” increased substantially, while the number of active public employees dropped to its lowest point in decades. Consider this, in 2001 the average “salaries and benefits” paid per employed was $127,962. In 2011-12 budget that expense per active employee is expected to grow to over $222,500 — an increase of 73 percent!

Taxpayers should expect a continuation of this trend throughout all levels of the public sector.

The role of government will increasingly be that of a glorified pension plan administrator, existing as a conduit between taxpayers and retired public employees.

As the unsustainable pension plans run their course taxpayers can expect to see less bang for their buck for decades to come.

Michael McDaniel is a sixth-generation Nevada County resident and owner of McDaniel Wealth Management in Nevada City.

But according to some of our electeds all such concerns are just some more of our local "rural myths" - don't worry, be happy.

[2mar12 update] A reader emailed me the latest report in the WSJ MarketWatch on the happenings in Stockton's slide toward Chapter Nine (kinda has ring to it), and their clueless citizens wrestling with the ghosts of their imaginings.

Also, Mike McDaniel, author of the above Union piece, posted a comment below that links to a Cato Institute graph that compares the average of total benefits received by federal and private sector civilian workers.  This graph is reproduced below.

Comments

[Russell Steele]

We once owned one of the most genteel AKC Rottweiler in the County named Hoover. Though he relied on his breeds reputation for being fearsome in protecting our property, he had an unusual capability to totally ignore any animal that was larger than he was. Hoovers attitude was if he did not recognize the potential threat then he did not have to deal with it. He chased squirrels in the yard, but ignored the bears and deer that came into his yard. They were bigger than he was. It was the same when encountering a larger dog on the ditch trail. Ignore it and it will go away.

County leaders failure to recognized the danger of unfunded pension liabilities reminds me of Hoover and his attitude about problems. If it was problem he could not deal with he just ignored it and hope it goes away real soon. It appears that our Supervisors have adopted Hoovers strategy in dealing with the unfunded liabilities, ignore the problem and hope it goes a way real soon. They are Hoovering!

[Gregory]

As the state sheds obligations onto the counties, it will get worse. And fast, since the state also needs to avoid bankruptcy.

We have state and local government employee pensions in the shape we have because of the meteoric rise in property values, and the resultant tax revenues. It was obvious on the way up that it wasn't sustainable, but the politicians spent what came in and bet the farm on it continuing forever.

[George Rebane]

"Hoovering", hmmm. Kinda catchy with an historical cache to remind us of decades past. It may catch on.

[billy T]

Saving for a rainy day during sunny times is darn near impossible for most politicians. Can't have a prudent reserve when all that money is just sitting there for raises and new cars and a thousand of other things that need to be done. Most are non priority. Just look how our dedicated county employees repeatedly pointed out the millions just sitting there when the last round of lay offs were approached. Its their money! It is human nature to believe that when the good times are rolling, it will always be that way. Just ask any homeowner or investor why they are dumbfounded or surprised when their nest eggs are not as big was they projected they would be by now. Dr. Rebane's experience of pointing out potential shortfalls to the BOS in a rather straight forward non threatening manner proves the old Japanese saying "The nail that stands up gets pounded down." This whole thing does remind me of Mr. Steele's sweet Hoover. The Chinese say "If there is no solution, there is no problem", albeit Hoover and the BOS have skewered the gist of the meaning. Gives a modern meaning to the phrase Hoover Camps.

[Gregory]

Let's put some numbers to it. Imagine you're a really big journalist who moved into town from the Bay area in 2005 and found a big house (by Frisco standards) on a huge lot (by Frisco standards), a steal (...) at only $605K. To begin with, you pay six times the taxes of the similar house next door, again,a bargain compared to you know where...

Fast forward seven years, the estimated value of the home is now down to about $275K, the assessed value is around $450K, you're still paying four times the taxes of your next door neighbor and the county is hoping prices will rebound before they have to reduce the assessment a whole big bunch again and the associated revenue forecasts for the whole county.

There is no assurance we've hit bottom on real estate, nor is any great rise likely to occur without something akin to a hyperinflation, which would not be a solution. We live in interesting times.

Revenues continue to decline, real cuts are yet to be made.

[Barry Pruett]

Nicely written George and Mike.

[Russell Steele]

According to Zillow Nevada City housing prices are now down 9.8% from last year. More details here. However, when you look at the graphic, it looks like the bottom may have been reached.

The scarry part, it there are 112 foreclosures pending in Nevada City according to a Yahoo Search.

Nevada City, CA foreclosures: 112 results in Nevada City CA

If you search for Nevada County Foreclosures, there are 823 listed. More details here.

All of these foreclousures are forcing down the property values in the county, which are reducing the county tax revenue. While we maybe a well run county, there are factors over which the BOS and the County Staff have no control. Yet, we hear that unfunded liabilities are just more "rural myths" as were the Diaz depositions, "just rural myths" according to one Supervisor. If every tough problem the BOS has is just a "rural myth" then we are in big trouble.

[Gregory]

Russ, bottoms have already been called multiple times, and it won't happen until all the bank-owned properties that affect our market are flushed out of the system, signaling the end of the bad news.

Check some of the other metrics on that page (pull down menu under Home Values, like homes foreclosed and sold for a loss.

I'd not bet on this being the bottom, but even if it was, the assessor's rolls are inflated from the bubble, as are the obligations taken on by state and local governments when it looked to some like happy days without end.

[Russell Steele]

Gregory,

You are correct, I should of added a but after "the bottom may have been reached." The point I was trying to make that there are lots of foreclosures yet on the horizon that can drive down the price of housing.

[George Rebane]

BTW, Bob Crabb's blog contains a pithy analysis of FUE's ongoing hissy fit about SESF. You can link to it from the 'Our Links' panel on the right.

[John Galt]

While the county's employees have declined in number to 777, we sometimes forget that a retiree with a lot of years working, has a pension equal to 75% to 100% of their annual salary at retirement. That pension continues for life. Which can be a long time if you retire at age 55.

I suspect some of the county employees that were recently laid off, have ether claimed early retirement or will soon.

Which would explain (in part) why the combined labor and benefits increased even though the number of employees decreased.

Very glad that you (and Mike) have continued to address this issue.

--John Galt.

[Michael Anderson]

Any prognostication that purports to tell me what is going to happen in 2035 is not worth the eyeball time, IMHO. The future is entirely unpredictable, but it certainly is fun to guess. That being said, I tend to ignore gloomy guesses: things just seem to always work out better than predicted.

[Todd Juvinall]

America is a country of optimists no doubt about it. The devil is always in the details.

[Douglas Keachie]

Let's see if I got this right:

In the quest for lower taxes, not smaller government per se, you all cheered when better technologies allowed for fewer government employees, and you reduced the number of employees. Right?

You also are all men of your word, your word stand for something, and your government's word is likewise supposed to be sacred, right?

So basically speaking, you only did part of the math. You, not the government employees, forgot to take into account that fewer employees would result in lower tax revenue, and thus less money to pay the pensions which you had already promised to do. Right?

Now who are you blaming for and want to have pay for YOUR BIG FAT MISTAKE?

The government employees, right?

Somehow the situation is all their fault, right?

The pensions were set up well before the demands for lower taxes via fewer employees, right? I'm not positive on this, but I'm pretty darned sure the pensions were not set up post 2007.

It's cool that automated websites and phone systems can handle many more citizens requests for information than a bunch of employees at a much lower cost, but in calculating that much lower cost, YOU FORGOT to take into account the pensions that had already been promised as a condition of employment. Poor math aptitude, if I ever saw it.

"The devil is always in the details."

or more accurately, "The devil is always in the details, prior obligations, YOU forgot to factor in".

Don't go around blaming others for your mistakes, be a Lannister, and pay your debts. And next time, do overlook the details.

[George Rebane]

MichaelA 1128pm - rejoice, the folks at the Rood Center are in total agreement with you. But since you probably don't reject all planning, it would be of interest to know if there are any time horizons that make such efforts worthwhile.

As a matter of review, there have been many epochs where such "entirely unpredictable" claims were made about the future, primarily in Sacramento and Washington DC (and continue to this day). And as you state, things always seemed to have worked out better when we consider what real tragedies we could have had instead of the Great Depression, WW2, ..., Great Society, Vietnam, ..., 1970s,..., Depression2, ..., Gulf1&2,... . That is why 'Don't worry, be happy' is such a useful shibboleth.

[Douglas Keachie]

That's overlook as in oversee, the details.

[George Rebane]

DougK 842am - where do you think the money comes from that public service employees use to pay their taxes?

[John Galt]

Michael 11:28pm Certain things can be easily projected, others not. For example, I suspect that you would not dispute the projected return date of Haley's comet. It seems to me that projections based on sound mathematical and statistics can be relied upon. The problems related to pensions fall into this category.

If this problem doesn't end catastrophically, it will NOT be because the problem is ignored. It will be because the problem was faced and dealt with responsibly...and soon.

From my experience as a contractor, I've seen problems ignored by homeowners for years with expensive consequences. So I tend to believe it's best to work on resolving problems early on.

--John Galt

[Douglas Keachie]

"DougK 842am - where do you think the money comes from that public service employees use to pay their taxes?"

from all of the taxpayers, including themselves, so what else is new? So far, the public employees are not griping about having to pay more taxes in order to make sure their pensions are funded, AFAIK.

[George Rebane]

"from all the taxpayers, including themselves, ..." That public service employees are issued dollar printing presses must be the best kept secret in the land.

[David King]

Here Doug,

This little poem should help you to understand George's point!

Christian Morgenstern

Korf’s clock

Korf a kind of clock invents
where two pairs of hands go round:
one the current hour presents,
one is always backward bound.

When it’s two – it’s also ten;
when it’s three – it’s also nine.
you just look at it, and then
time gets never out of line,

for in Korf’s astute invention
with its Janus-kindred stride
time itself is nullified.

Now, apply this to the net tax increase from public sector workers.

All of the money they make is a withdrawal from the coffers.

[Douglas Keachie]

I'm not going to post the W-2, or our tax return, but trust me, as a retired employee and my wife as an active school teacher, we both pay together, well over $15,000 in taxes, every year, after all the deductions, etc. What on earth make you think public employees don't pay both state and federal taxes? Sounds like a concept that Rust and Michael Allen Weiner (AKA Mike Savage, PhD in not much that he's ever accomplished ed as an epidemiologist) would try to foster on those discouraged from continuing their educations past 8th grade math.

[Paul Emery]

It's interesting when the discussion about the cost of retirement from public service is discussed nobody talks about military retirement and how much that costs. A person I am very close to retired as an officer from the Air Force in 1966 and has been collecting a healthy pension for nearly 50 years. Do you propose or feel we need any reform in the military retirement system? The military vets also have a strong lobbying team.

[Douglas Keachie]

"Now, apply this to the net tax increase from public sector workers. All of the money they make is a withdrawal from the coffers."

to which they also contribute.

And which are also increased by the things they bring to society. You wanted all those criminals out there running around a muck with no prisons and no cops? Would you like to bury the dead who happen to collapse on your property, because there is no county to come get them? You want only the rich to have educated offspring? Just what is you real vision here of a society with no government. Are you planning on filling all the spaces with unpaid volunteers? They'll be hard to find, as most of them will be employed protecting the fiefdoms of their masters. Freedom? HA!

[Brad Croul]

We need to legalize marijuana and illegal immigrants. If immigrants were on the books and paying taxes, and marijuana production and sales were being taxed, rural counties and places like Stockton might be able to bring more tax dollars in to help with their fiscal problems.

Money would also be saved through lowered law enforcement budgets since less time would be spent chasing down and incarcerating immigrants, marijuana drug reps and farmers. Smaller government (less pensioners) is definitely part of the answer.

Those tasked with the creation of the retirement and pension plans who came up with the idea of working 20 years (or until 55, or 65 years of age) and retiring with benefits from a job based their analysis (at least partly) on the actuarial science of the day. The numbers worked then, but a lot has changed since.

People don't just "up and die" like they used to. We live longer lives and need, and expect, more expensive levels of medical maintenance to keep us "up and running". There are also the everyday rising costs of living that need to be accounted for.

The old established health and retirement "insurance" formulas need to be re-worked if they are going to meet the needs of longer-lived pensioners with higher quality of life expectations.

The the failings of the pension system probably account for the “double dipper” pensioners who realize that their pension current pension checks are not going to make it in the long haul (or, heaven forbid, one of their pension plans might not be "too big to fail").

Is another reason our economy is not quite as hot as it once was also due, in part, because not only our jobs, but our retirees, are exporting themselves to low cost-of-living, sub-tropical countries staffed by low-paid foreign workers, so they can support themselves in the manner they are accustomed on the pensions we are paying them? Not only are Latinos sending their paychecks to their families back to Mexico, our ex-pat pensioners are doing the same as they travel the world looking for low-cost alternatives to living in the USA and our ridiculously expensive health care system.

[billy T]

Yep, things have changed. I graduated from high school at 17. My Dad took me aside and encouraged to be go into the military. He said I could retire at 37 after 20 years and draw retirement. Then go work for some low paying job in civil service and after another 20 I would have two great pensions. Well, a military person now has to wait till they are 60 or something to draw retirement and civil service jobs are not exactly low paying these days. But, it worked for Dad's buddies. Things have indeed changed. Dad used to talk about all his buddies that retired down in Mexico and lived like Kings. But as these retirement enclaves grew, things became more expensive. Also folks wanted to be closer to their crumb snatchers. Happiness is being a Granny I hear. BTW, I have been looking into Nicaragua to retire as a possibility. The country has changed and now welcomes Gringos. They have beaches and are known for the cheapest food in Latin America. It has drawbacks like any other place. Daily power outages, volcanoes, earthquakes, and cab drivers that over charge touristas. But the political climate has stabilized and it is safer than LA or SF at night. One drawback is the government wants you to have 50k in the bank to live there, kinda like Nevada County. I could turn green and explore volcanoes and both coasts and different climate zones and eat a lot of fish. Sitting on the beach under my cabana enjoying the ocean breeze and waiting for my SS check would make power outages tolerable. Don't worry, be happy.

[Paul Emery]

Yeah, I had a friend who was tossed out of High School his senior year for punching a teacher. He had the choice of jail or the military, which was his obvious choice. Twenty years later at my high school reunion he shows up and was already retired from the Air Force as a Master Sgt. That was 1982 and he was 37. We could easily pay for a 60 year retirement for my friend along with health care and whatever else comes with the package. Not a peep about the military retirement gravy train from this blog.

[David King]

Doug said:

"Would you like to bury the dead who happen to collapse on your property..."

You weren't suppose to see that! :)

[George Rebane]

PaulE 318pm - What kind of a "peep about the military retirement gravy train" would like to hear? It's part and parcel of the public service employees pension problem. The only things good about the military are that we definitely need those kinds of government employees, and their compensation packages are not negotiated by military service unions that buy off the Pentagon and Congress. That's why military compensation has always been the best deal in town for the private sector taxpayer.

[Russell Steele]

You know Paul, as a 20 year Air Force vet, I retired at 3/4s of my base salary which was not much, with some small cost of living raises along the way. When I left the Air Force I went to work in the aerospace industry and used my retirement pay to send four daughters to the University and today they are all productive citizens make good salaries, and paying lots State and Federal taxes. Now I could have just pissed that retirement money away and let my daughters fend for themselves, get married out of high school, stay home and raise some rug rats and be part of the 51% that does not pay any taxes today.

Now that our daughters are all productive citizens, Ellen and I can relax and enjoy life a little rather than work full time, [I am still consulting and freelance writing.] So far I have invested my retirement funded time in community projects, starting with helping to bring the Internet to Nevada County in the 1990s, giving it to schools and the library, including help start the Internet docent program at the County Library training 1000s on how to use this communications tool. I have been an Economic Resource Council volunteer for all the years the ERC has existed, and I have served as a volunteer longer than any of the hired hands. I served two four year terms as a Transportation Commissioner, and now serve as the Executive Director at SESF, which just brought the community "one of the best technology presentations in Nevada County" according to one participant.

I think that I have invested my retirement check in the community in a wise and productive way. And, the best is yet to come, though I expect my benefits to be cut in the future, especially the medical benefits, which may curtail some of my community activities to focus more on my writing and consulting to make up the difference. Stay tuned!

[Paul Emery]

Russ

My observation about the generosity of our military retirement system has nothing to do with your considerable public service achievements.

George

"The only things good about the military are that we definitely need those kinds of government employees"

Don't we also definably need police officers, firemen, teachers, social workers, public health workers, Judges, Probation Officers, Public Defenders......I can go on and on

Do you honestly believe there is no lobbying effort supporting military workers?

Here's just a start

http://www.military.com/spouse/content/military-life/military-resources/military-and-veteran-associations.html

[For readability of this comment stream, the ridiculously long list of Military Associations originally listed in this comment have been deleted. They may be accessed from the above link. gjr]

[George Rebane]

PaulE 713am - "Do you honestly believe there is no lobbying effort supporting military workers?" - please read exactly what I said and don't do the usual progressive two-step of wild ass inferences about what I didn't say.

To the extent that the military retireds have a lobbying effort, it must be the absolute crappiest on God's green earth. The only real benefit they get is through the public service unions that have negotiated contracts for other positions which allow the vets to count their military time as 'in government service time' for calculating pensions. I don't begrudge them that as long as they are not then triple dipping on the subsequent government jobs.

[Douglas Keachie]

Well Russ, 4 kids through school on just the master sargent's salary? Very good. Could today's master sargent do the same today with college expenses where they are now?

[Paul Emery]

George

"their compensation packages are not negotiated by military service unions that buy off the Pentagon and Congress."

I based my response on this. Are you saying that there is no lobbying efforts that influence legislation in the usual special interest manner? $$$$$$

[George Rebane]

DougK 738pm - Russ retired as a LtCol.

PaulE 802pm - Don't make any such claim at all. But I reassert that, given the pension and benefits that the retired military receive, especially those with less than 20 in service, they must have the least capable lobbyists in Washington.

[billy T]

I can see Mr. Emery's point. The Toys For Tots Foundation, Fisher House, and Order of Daedalians are certainly breaking the bank. Noticed the list omitted the Daughters of the American Revolution, but I could be wrong. Today, the gloomy news reported durable goods orders plunged and housing has a long way to go....hopefully, not a long way to go to hit bottom. Don't worry, be happy http://money.msn.com/business-news/article.aspx?feed=OBR&date=20120228&id=14836797 http://money.msn.com/business-news/article.aspx?feed=OBR&date=20120228&id=14836429

[Douglas Keachie]

George, inadvertently blended Paul and Russ posts, resulting in misunderstand, error, mistake, fault, etc. Makes much more sense, now. Had to put Tankasaurus down yesterday, irreversible cancer, after 11 years of wonderful companionship, we are down to two dogs for now. Today we will bury him in the meadow, in our pet cemetery.

[George Rebane]

DougK - hearfelt sympathy and condolences to Tankasaurus' family. We are dog people too, and also know the tears from saying good-bye to a loved member of our family. gjr

[Russell Steele]

Doug,

You have our sympathy and condolences for your loss. It took us three years to get over the loss of Hoover. He was a diabetic like me and we nursed him for six years, longest survivor ever according to our vet. He went blind with cataracts, and we had them removed and replace with new lens. He returned the love every one of his remaining days.

[Paul Emery]

Yes, I had to let my dog go this November. She was 13 and was born on my property. She received the Posthumous Tailwager Award at KVMRs Christmas party last December for doing the most radio shows of any dog in KVMR's history and was also recognized for her tireless efforts to keep the trash cans clean. I sure do miss her for sure.

[David King]

All my sympathy Doug.
I lost my Golden last year...miss him.
Why they decided to join us at the campfire I'll never know, but we're the better for it!

[Gregory]

DK, the path from Gray Wolf to Fido was very possibly through our garbage piles. Dogs are a subspecies of Gray Wolf, very possibly with the first few generations self selected... a gray wolf who was less fearful and less aggressive would be hanging out on the outskirts of a human group and more successful at getting free food from the two legged hunters than their wilder cousins. Some geneticists think the earliest 'dogs' might have been just a hundred years separated from their previous packs.

We are an acceptable substitute for dogs from their point of view, and vice versa. Best friends indeed.

There's a fascinating NOVA on dogs (a couple or more years ago) and one of the hints regarding adrenaline links was from Russian fox breeding experiments in Siberia. Foxes hate people and managed to do a lot of damage to their handlers before being harvested for their pelts (can't blame them)... so a biologist set to breeding a calmer fox. After a number of generations, they started getting dog like coat patterns, and even started barking, something foxes don't do. No, they weren't dogs, but the similarity was striking.

[billy T]

Doug, my condolences to you and your wonderful family. Words seem rather empty and shallow at a time like this. Tankasaurus was well loved and loved well. Again, my condolences.

[Gregory]

"To the extent that the military retireds have a lobbying effort, it must be the absolute crappiest on God's green earth."

No, it's actually pretty good. It just that the state and local public employee unions are more professional when it comes to threatening incumbent politicians, to increase pay and benefits or else face crushing opposition in the next election, than military pensioners can ever be.

[Douglas Keachie]

You are all much more wonderful than I had ever imagined. Thanks so much, from my wife , Dianka, and two remaining dogs Katrina and Lucky, and Xena, Athena, and Doogie, the cats, as well as myself.

[THEMIKEYMCD]

Nothing to see here: http://www.cato.org/images/homepage/200908_edwards_blog2.jpg

[Michael Anderson]

Doug -- so sad to read about Tankasaurus, I'm sorry for your loss. It's good that you have a place to go on your property to remember him when you need to...

[Michael Anderson]

For Mikey:

I think it is extremely important that Mike McDaniel respond to what is being alleged in the Haffey memo. If he doesn’t respond, any subsequent article by Mike on this subject that doesn’t address Rick Haffey’s claim will not bear much weight.

Let’s hope Mike McDaniel addresses Haffey’s memo sooner rather than later.

[Todd Juvinall]

I think it is extremely important for those folks who have no idea what they are talking about to apologize to Mikey. He seems to have uncovered the truth and today's Union story just might agree.

[George Rebane]

The unfunded liabilities discussion, that includes Dai Meagher's 3mar12 Union article, is continued in my 3mar12 posting.
http://rebaneruminations.typepad.com/rebanes_ruminations/2012/03/nevada-county-scattershots-3-march-2012.html

[John Galt]

Mike 10:34pm: I'm haven't seen Mr. Haffey's memo. For those of us who don't recceive his memos would you share Mr. Haffey's allegations...and how they relate to the fundamental points of McDaniel's article--which is that:

Salaries and benefits have increased 73% over 10 years.

47% of the county budget is for salaries and benefits--and increase from 39% ten years ago.

Salaries and benefits increased even while county staff decreased.

It would indeed be informative and important to know if the above information is innacurate.

The details of Mr. Haffey's analysis would be very welocme.

--John Galt

[George Rebane]

JohnG 1230pm - here's the entire Haffey's Friday memo.
https://public.nevcounty.net/County%20Executive%20Office%20Public%20Library/Friday%20Memos/2012-3-2%20CEO%20Friday%20Memo.pdf

[THEMIKEYMCD]

I tried my best to express the fact that taxpayers (federal, state, local) have and will continue to see less value for their tax dollars due to unsustainable/irresponsible pension plans. I picked a very well run municipality to highlight the fact; I could have cherry-picked any number of munis that are much worse off!

I strongly suggest that anyone questioning the fact that the # of Nevada County Employees has dropped significantly over the past 15+/- years AND THAT THE LINE ITEM FOR SALARIES AND BENEFITS HAVE RISEN SIGNIFICANTLY (and is continuing to rise) simply treat themselves to viewing the available Nevada County Budget Executive Summaries available here: https://public.nevcounty.net/County%20Executive%20Office%20Public%20Library/Forms/AllItems.aspx?RootFolder=%2FCounty%20Executive%20Office%20Public%20Library%2FBudget%20Analysis&FolderCTID=0x01200050A50F65BCAA08419CD79CACFD11BF8A00FE91E0B140982F45894871A8D7AD1C25&View={EF04BE0E-A0EF-4E77-9619-51DC6E94491C}:

Mr. Haffey and I don't have a disagreement on numbers, per say, but the semantics/english used to express them. Mr. Haffey's "methodology" is my methodology.

Again, the number of public servants dropped 26% and the budget INCREASED 37%... the LINE ITEM FOR "SALARIES AND BENEFITS" increased from 39% of the total budget TO 46.99% of the total budget, despite a 26% drop in the number of employees.

Notice that no one is questioning the 'art':
http://rebaneruminations.typepad.com/.a/6a00e54f86f2ad88330168e7ffb7c2970c-pi

[George Rebane]

MichaelA 1034pm - Mike's piece has been explained ten ways from Sunday here and on NC2012, with Mike providing ample references for the case he made. It is more important to the county's taxpayers that both Mike's and Dai Meagher's Union pieces be addressed.

Let’s hope the county addresses the unfunded liability issues raised by McDaniel and Meagher sooner rather than later. As a response, the statement in the Haffey memo was sidestepping and lame.

[billy T]

Ah, understanding the pension mess for dummies: http://www.mercurynews.com/bay-area-news/ci_20098154

[Russ Steele]

Here is an insightful article on the problem in San Jose. Interesting that they refuse to deal with reality. One wonders if our local officials are having the same reality problem? See the three problems listed in the article.

Recent San Jose actuarial reports show $3.5 billion of city debt for underfunded pension and retiree health benefits -- a shortfall that works out to about $11,000 for every household in the city.

Yet, as Mayor Chuck Reed proposes substantive pension reform, workers and a local television reporter are hyperventilating about irrelevant numbers that distract from the ballooning problem.

If not for major layoffs and salary cuts last year, the shortfall would be much worse. It would also be much larger if the city used more realistic investment earnings assumptions rather than relying on overly optimistic forecasts.

Nevertheless, the calculations show the city's retirement programs combined have only 56 percent of the funds they should. Put another way, the unfunded liability equals about eight years of city payroll.

To understand what's going on here, keep in mind that employees earn additional future retirement benefits for each year that they work along with their salaries. So the city and its workers should invest enough money annually to cover the future costs of those newly earned benefits.

The city has three problems: First, the amount that should be set aside for those newly earned benefits has increased.

Second, even that greater amount isn't enough because the payment calculation relies on those optimistic investment assumptions.

Third, past reliance on unrealistic assumptions, retroactive benefit increases and actuarial changes have caught up with the city, leaving it with huge unfunded liabilities for pensions. As for retiree health benefits, only small amounts have been set aside for future benefits.

The resulting debts are treated like mortgages, with annual payments spread over as much as 30 years, thereby passing costs to the next generation.

[billy T]

Agree with Mr. Steele. I posted San Jose to show similarities with our well run county to be detected by the astute reader such as Mr. Steele. Bottom line: to deal with unfunded liabilities expect fewer government workers and services coupled with an increasing percentage of the budget going to pay pension obligations.